BEC Brainscape Flashcards
BEC
A control chart shows the performance of a particular process in relation to acceptable upper and lower limits of deviation. Performance within the limits is termed statistical control. Processes are designed to ensure that performace consistently falls within the accepatble range of error.
BEC
A cost driver is defined as a casual driver (the cause) that increases the cost (the effect) of a cost objective.
BEC
A fishbone diagram describes a process, the contributions to the process, and the potential problems that could occur at each phase of a process. The chronological sequence of events is represented by a single horizontal line while the contributions to the process are represented by diagonal lines that create the image of a fishbone.
BEC
A regression equation is a statistical model that estimates the dependent variables based on changes in the independent variable.
BEC
A value chain analysis is a macro level flowchart that shows the relationship between broad funcational areas, the production delivered by the organization, and maner in which value is added at each link in the chain.
BEC
A variable cost is one that varies in total but is fixed per unit. A fixed cost is one that is fixed in total but varies per unit. A mixed cost is one that contains both fixed and variable cost. A direct cost can be either fixed or variable.
BEC
Accordign to the organizational structure principle supporting the control environment component of the COSO’s Framework document, no more than three layers of organization should exist between the CFO and the individuals involved in the financial reporting.
BEC
Active engagemetn by an audit committee in representing the Board of Directors relative to all matters of internal and external audits is evidence of the board’s understanding of their oversight responsibilty over financial reporting.
BEC
Activity-based costing (ABC) assumes that the resource-consuming activities of an enterprise that generate costs are activities and not outputs. ABC is appropriate for all types of cost accumulation systems including both job order and process costing.
BEC
Activity-based costing is a system that accumulates all costs of overhead for each of the activities of the organization and then allocates those activites costs to the cost objects that caused the activity.
BEC
An engineered cost bears an observable and known relationship to a quantifiable activity base. Indirect costs (overhead costs) are all manufacturing costs other than direct material and direct labor. A target cost is carefully predetermined standard cost taht should be attained.
BEC
An individual who knowingly executes or attemps to execute, securities fraud will be fined or imprisoned not more than 25 years or both.
BEC
breakeven = (100000+240000)/200
BEC
Continuous probabilty simulation is a procedure that studies a problem by creating a model of the process and then, through trial and error solutions, attemp to improve the problem solution.
BEC
Control activities are the mothods used to implement the response to risk. Sometimes the control activity is also, effectively, the risk response.
BEC
Conversion cost pricing could be used when the customer furnishes the material used in manufacturing a product. Conversion cost pricing places no (not minimal) emphasis on the cost of materials used in manufacturing a product. Conversion cost pricing places heavy emphasis on indirect (overhead) costs and direct labor, but disregards consideration of direct materials.
BEC
Conversion costs consist of direct labor and overhead. Accordingly, conversion costs include all product costs except direct materials.
BEC
COSO enterprise risk management framework - internal environment, setting objectives, event identification, assessment of risk, risk response, activities (control), information and communication, monitoring
BEC
Cost drivers are activities that cause costs to increase as the activity increases. The cost driver is often non-financial.
BEC
Cost of jobs completed (or cost of goods manufactured) equal direct materials used + direct labor + overhead applied + beginning WIP - ending WIP.
BEC
Direct costs are easily traceable to a product. Payments to employees who develop computer programs are considered part of direct labor. Value-added costs increase the worth of the product or service to customers. Employees who develop these programs are adding value to the computer programs.
BEC
Direct labor is a prie cost, a conversion cost and a product cost.
BEC
Event inventory is when management uses listigns of potential events common to a specific industry as a means of identifying risks or opportunities, the method is know as event inventory.
BEC
Expected value analysis represents the long-term average of repeated trials and is found by multiplying the probabilty of each outcome by its payoff and then summing the results.
BEC
If directors acts in good faith and in a manner the director believes is in the best interest of the corporation, and the director exercises the care that a reasonably prudent person would exercise ina similar position, the director is protected against liability for decisions the director makes that turn out poorly for the corporation. This is the busines judgement rule.
BEC
In 1992, the Committee on Sponsoring Organizations (COSO) issued Internal Control-Integrated Framework (the Framework) to assist organizations in developing comprehensive assessments of internal control effectiveness. The Framework is widely regarded as an appropriate and comprehendisve basis to document teh assessment of internal controls over financial reporting.
BEC
In breakeven calc, fixed costs can include depreciation
BEC
Indirect materials are included in factory overhead costs as they are used in the production process. Therefore, the issue of indirect materials would decrease stores control and increase factory overhead control.
BEC
Inherent risk is the risk to an entity in the absence of any actions managmenet might take to alter eitehr the risk’s likelihood or impact. The $10 million exposure identified in the problem is the risk exposure iwthout management’s intervention.
BEC
Inventoriable costs are assets until sold, when they become “costs of goods sold.
BEC
Job order costing is a method of allocating production costs to product and services that are identifiable as separate units and require greater or lesser amounts of work to complete.
BEC
Learning curve analysis is used to determine increases in efficiency or production as experience is gained. Both products have long production runs, making learning curve analysis the best method for estimating the cost of the competitive bid.
BEC
Multiple regression analysis is an expansion of simple regression because it allows consideration of more than one independent variable.
BEC
Operation costing is a hybrid system that allows the company to use job order costing for some costs of production and process costing for other costs.
BEC
Pareto diagram represents an individual and cumulative graphical analysis of errors by type.
BEC
Plant-wide application rates applied to machine hours is a traditional costing approach.
BEC
Prime cost is direct labor and direct material
BEC
Process costing is a method of allocating production costs to products and services by averaging the cost over the total units produced. Costs are usually accumulated by department rather than by job.
BEC
Regression analysis can be used to separate costs into fixed and variable components by means of least squares. This method mathmatically fits a trend line to minimize the distance between the trend line and the actual observations.
BEC
Regular reporting to the audit committee represents reporting of deficiencies, not ongoing monitoring.
BEC
Relevant range is the range of activity within which the relationships of fixed costs and variable costs are meaningful and valid.
BEC
Residual risk is the risk exposure after management purchases the hedge/responds to the risk.
BEC
Sales price less the cost to complete is defined as the net sales value at split-off.
BEC
Sales price less the cost to complete is defined as the relative sales value at split-off.
BEC
The board of directors has a fiduciary responsibility to act on behalf of and in the best interest of the corporation.
BEC
The components of th enterprise risk management framework are the criteria used to evaluate its effectiveness.
BEC
The COSO identifies four stages of the change continuum beginning with control baseline, followed by change identification and change management and concluding with control validation/update. Change identification considers the risk assessment component of internal control and identifies changes in process or risk and verifies that the design of underlying controls remains effective. Monitoring through the use of ongoing and separate evaluations should consider the ability to identify and address changes in the change identification stage of the monitoring for change continuum.
BEC
The opportunity cost of makign a component part where there is no alternative use for the factory is zero because nothing is being foregone.
BEC
The regular evaluation of employees for their competence in financial reporting is an important link between human resources policies and the achievement of financial reporting objectives.
BEC
Weighted Average = units completed + ending WIP % complete; 50,000 prior month cost + 720,000 current month cost = 770,000 total; $770,000/550 units = $1,400 units; ending inventory 150 units x $1,400 = $210,000; $50,000 beginning inventory + $720,000 costs added during quarter - $560,000 COG completed (400 x $1,400) = $210,000 ending inventory
BEC
Sunk costs refer to past costs that have been incurred and are not relevant to any future decisions.
BEC
The IRR method is less reliable than the NPV technique when there are several alternating periods of net cash inflows and net cash outflows or the amounts of cash flows differ significantly. The IRR is strictly a percentage measure of return, while the NPV is an absolute measure. Due to this difference, the timing or amount of cash flows under IRR can be misleading when compared to teh NPV method.
BEC
When using the net present value method of capital budgeting, different hurdle rates can be used for each year of the project.
BEC
IRR = net incremental investment / net annual cash flow
BEC
When calculating PV net cash outflow, take [cost - salvage value(PV factor)]/PV of annuity
BEC
A project’s net present value is a function of current and future cash flows, including proceeds from the sale of the old asset.
BEC
Book depreciation is not relevant to cash flow determination for capital bugeting purposes because depreciation is a “non-cash” expenditure. Further, the only cash flow effect of depreciation is the tax shield, and there is no “tax shield” for book depreciation - only for tax depreciation.
BEC
The profitability index is the ratio of the present value of net future cash inflows to the present value of the net initial investment. The profitability index is also referred to as the “excess present value index” or simply the “present value index.” Companies hope that this ratio will be over 1.0, which means that the present value of the inflows is greater than the present value of the outflows.
